Latin and North American hydrocarbon producer Karoon Energy reported a 35% decline in first-half underlying net profit after tax to USD 29 million. The result was struck on a 44% fall in production to 3.2 million barrels of oil equivalent, partially offset by 22% higher prices.
Karoon’s well-timed acquisition of the Baúna oilfield has furnished it with healthy net operating cash flows and growth potential.
Bears
Baúna was purchased past its prime, in decline, with reserve life of less than eight years and material capital expenditure ahead to maintain oil output.
Karoon produces around 8 million barrels of oil equivalent annually from its wholly owned Baúna field in Brazil’s offshore Santos Basin and around 3.5 mmboe from 30%-owned Who Dat on the US Gulf Coast. The company acquired Baúna from Petrobras in 2020 and steadily increased production via well interventions and new developments. Field life is approaching six years based on proven and probable reserves of 46 million barrels at the end of December 2025, though this excludes a further 140 million barrels in 2C contingent resources that have the potential to increase life further. We credit a life of more than 10 years, assuming conversion of some 2C contingent resources into the reserve category with drilling. There are also prospective untested targets within Karoon’s permits.